Gustavos Abertas works with a crew as he sprays water to keep dust down in a housing development in Anthem Ranch near Anthem Ranch Road and Lowell Blvd. in June. The informal energy summit at the Colorado State Capitol Thursday addressed forced pooling of mineral rights owners. (Helen H. Richardson / The Denver Post)

Flowlines, forced pooling and other oil and gas-related issues were discussed at an informal energy summit at the Colorado State Capitol Thursday.

At the end of the day, members discussed the possibility of expanding the committee, talked about setting a meeting for next month, and pondered suggestions of rule revisions, best practices and possible legislation in the next legislative session.

Sen. Vicki Marble, R-Dist. 23, and Rep. Lori Saine, R-Dist. 63, hosted the meeting, which is one of three held over the past several months, to get stakeholders to the same table to discuss possible best practices, rule changes at the Colorado Oil and Gas Conservation Commission and future state legislation.

District 3 Weld County Commissioner Barbara Kirkmeyer, a panel member and someone who has worked on a similar oil and gas group in the 1990s, said sitting on this board has been "informative and educational for all of us.

"These types of discussions have gone on for years and will probably continue to go on for years," she said.

While she doesn't know that this particular committee can go for years, she suggested involving a representative from Governor John Hickenlooper's office and start looking at statutes they can fix.

She agreed with Marble, that the legislature shouldn't pass laws just for the sake of change and without fulling understanding the issue.

"We need to be doing something and getting it right," she said.

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Broomfield City Council members Elizabeth Law-Evans and Mike Shelton have attended as representatives of the city.

Oil and gas operators were invited to the energy summits, but declined to be part of the discussion panel, and instead listened in as others weighed issues.

"I'm very disappointed that we do not have people here representing the developers, because we need to work together on this and be sure we're all on the same page," Marble said during the morning session.

Several representatives from the oil and gas operators identified themselves by a show of hands in the afternoon session, which examined potential operator rule revisions and legislative changes.

Matt Sura, with the League of Oil and Gas Impacted Coloradans (LOGIC), kicked off the afternoon discussion about COGCC regulations — specifically with 35-day notices — the time allotted for mineral owners to respond to an election letter and the 35 days notice of a forced pooling hearing.

When residents receive an election letter, they have 35 days to either lease, be a working-interest owner or be considered a "non-consenting owner" and be subject to forced pooling if the do not respond in time.

Some people are not even aware they own mineral rights, he said, or could be on vacation, or preparing for the Christmas holiday, when the notice arrives.

Jill Fulcher, an oil and gas attorney with Beatty & Wozniak, PC who regularly works on pooling applications, sat on Thursday's panel as an expert in the area.

While she was cautious to wade into policy discussions, she did weigh in on issues, including saying that 90 days to provide notice of a hearing is a bit extreme and companies need more flexibility.

Kirkmeyer felt forced pooling is a situation where a state agency gets to determine the price of a private property lease to a private business.

She called the process ridiculous and said it "doesn't sit well with me as a person who owns property. The process needs to be shelved and started over."

That new process should include mineral owners receiving market value, which includes not having a penalty, and enough time to get an appraisal that they can present to the COGCC.

When a lease is signed, it's hard to say what a fair market value is at the time, Marble said. Other on the panel disagreed, saying there were tools to determine that fair value.

Broomfield's Shelton said he has heard that the COGCC has never denied a forced pooling order, but that it was anecdotal evidence. Even the COGCC representative could not recall when a forced pooling order was denied, he said.

The COGCC staff has adopted practices to ensure the operator is showing they've provided a reasonable answer, Fulcher said, but others at the table pointed out that neither practices were in writing.

"That's honestly a terrible way to do public policy," Shelton said. "It really needs to be written down. It really needs to be clear."

Another item of contention at the meeting was how these changes should be implemented.

For the most part, Marble was in favor of having the oil and gas industry correct the issues themselves through their state rules before introducing legislation.

"The worst thing a person can do is legislate something that is not necessary," Marble said, adding she knew of a lot of legislators who would not vote if they see industry trying to rectify the problem.

Shelton and Kirkmeyer were in favor of these types of outcomes coming from elected legislators.

"COGCC's charge is not to protect mineral rights owners," Shelton said. "Their charge is to efficiently get the minerals out of the ground. The difference between COGCC and legislators (is that) it's a body that protects individual and property rights."

Their discussions also turned to letters sent to residents and how to make them easier to understand by using layman's verbiage. An attorney who spoke at the July meeting agreed to take that into consideration.

At this time, COGCC has not issued policy that would require operators or the commission to have that type of language, Fulcher said, but she has learned that there will be policy changes forthcoming on materials that must be provided to support any type of application. It would be an opportunity for the commission to say what items are needed in a letter, what cannot be there and an example.

When drafting that, Shelton agreed with the idea of a committee's guidance and asked that it pay attention to mineral owners and to keep the letters simple, brief and clear.

Normally what you see in the business world regarding contracts, he said, is a clear and concise document that doesn't have a lot of legalese.

With incentives so far on the side of the operator and mineral owners who want to pool other people, it is almost to their advantage to make documents as unclear as possible, he said.

Marble again pointed to some of these changes getting fixed by the industry itself.

"I hear what the senator is saying," Shelton said. "I don't want to tell a company how to make their agreements, but I want to prevent a company from stealing people's stuff."

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